A renewed sense of optimism has swept through the cattle markets on the back of widespread rainfall, over the last two months. This still holds true, however, over the same period the realities of COVID-19 and the extent of disruption have altered the bigger picture.
At a domestic level, cattle prices have fluctuated since the turn of the year, as the sharp, rain-driven price increases have recently altered course. A correction was inevitable and while COVID-19 disruption caused a dampening effect, the impact of elevated cattle numbers, in response to record prices, triggered an adjustment.
Despite the operational challenges facing the industry, keeping a handle on the markets has never been more important to stakeholders across the supply chain. Online sales have risen, saleyards have adjusted to video streaming sales and implemented strict entry protocol to conform with social distancing requirements. The National Livestock Reporting Service (NLRS) also adjusted market reporting services to support COVID-19 containment efforts. A series of CV-19 indicators have been devised to keep stakeholders best informed in the current environment.
In the absence of carcase weight estimates, fat score and muscle score, the CV-19 indicators provide a weighted 7 day rolling average, live weight price, across several categories. For example:
- National CV-19 Feeder Steer Indicator = Yearling Steers; Weight Range = 330-400 kg (lwt); Sales Prefix = Feeders; Saleyards = all reported
- National CV-19 Heavy Steer Indicator = Grown Steer; Weight Range = 500-600 kg (lwt); Sales Prefix = Processor; Saleyards = all reported
- National CV-19 Medium Cow Indicator = Cow; Weight Range = 400-520kg (lwt); Sales Prefix = Processor; Saleyards = all reported
The temporary indicators provide an accurate perspective of cattle market trends. Feeder cattle prices have continued to come under pressure, as lot feeding outputs are tested. The national (CV-19) feeder steer indicator is currently reported at 356¢/kg live weight (lwt), 12% lower on its March peak, at 404¢/kg lwt. However, the indicator sits 35% higher compared to where it opened the year, as competition for suitable feeder cattle remains strong.
The increase for finished cattle prices was less pronounced, given already robust prices. The national (CV-19) heavy steer indicator is currently reported at 318¢/kg lwt, 7% back on its March peak, at 343¢/kg lwt, but 16% higher since 1 January. Short-term market fundamentals have sheltered finished cattle prices. Domestic availability remains tight and despite growing uncertainty, early signs of a recovery in China are emerging, where the impact of African Swine Fever continues to create a sizable protein deficit. A significant depreciation for the Australian dollar has also helped mitigate some of the price uncertainty.
The domestic picture will continue to change. Two shortened processing weeks will limit throughout in the short-term and recent forecasts indicate a positive rainfall outlook for much of Australia. At a domestic level, the overarching driver of cattle prices will be supply, however, the impact of COVID-19 will persist in the background.
Access temporary NLRS CV-19 indicators here
© Meat & Livestock Australia Limited, 2020
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To view the specification of the indicators reported by MLA’s National Livestock Reporting Service click here.